Leerink Partners analyst, Danielle Attafly, reiterated her Outperform rating on of Edwards Lifesciences (NYSE: EW) understanding that shares are likely to trade down after a top-line miss.

The miss was driven by a ~$5M impact from lower sales in France related to the reimbursement cap. The analyst believes that investors are likely to focus on EW delivering in-line U.S. THV (Transcatheter Heart Valve) sales, which – while still up over ~55% y/y vs. ~60% growth YTD – did not deliver the dramatic upside investors were expecting following a mid-quarter indication expansion into intermediate risk.

Parsing through the numbers, the analyst believes fundamentals are unchanged and would recommend buying shares on any weakness. In her view, the total addressable market for TAVR is intact, and she continues to believe the global market will top $5B by 2021 with EW retaining a market-leading position. The lack of dramatic outperformance in 3Q16 could make investors rethink the ramp trajectory in the much-larger intermediate risk patients, with EW management noting that while center capacity is not an issue, driving referrals will take some time. The analyst thinks the strength of the Sapien 3 intermediate risk data supports significant adoption in line with the 80%+ penetration into intermediate risk that past MEDACorp physician conversations have suggested.

Although the miss is a clear disappointment, the analyst is not throwing in the towel on her Buy rating. No change to the price target of $130 which is based a ~37.5x P/E multiple to 2017E EPS of $3.45.

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